Stretching the trendlines into 2012

The World Bank looks ahead to the rest of 2012, and isn’t very happy.

The world economy has entered a dangerous period….

[G]lobal growth and world trade have slowed sharply….

Here’s why.  The Bank takes current trends and projects their continuation forward:

Some of the financial turmoil in Europe has spread  to developing and other high-income countries, which until earlier had been unaffected. This contagion has pushed up borrowing costs in many parts of the world, and pushed down stock markets, while capital flows to developing countries have fallen sharply. Europe appears to have entered recession. At the same time, growth in several major developing countries (Brazil, India and, to a lesser extent, Russia, South Africa and Turkey) is significantly slower than it was earlier in the recovery, mainly reflecting policy tightening initiated in late 2010 and early 2011 in order to combat rising inflationary pressures.

It’s a good example of big-picture, research-informed trend extrapolation.

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